Volume 53, No. 4 April, 1997


Physicians in Idaho have a dream: offering hospital care to Americans over the age of 65, without forcing waitresses, ditchdiggers, and hamburger flippers-or everyone's grandchildren-to pay the bill.

The vision of free, nonsocialized medicine is inspired by nonsocialized higher education at Hillsdale and Grove City Colleges, which decline to accept funding seized from taxpayers. These colleges are thereby able to preserve their moral integrity, also freeing themselves of the burden of hiring couriers to fly back and forth to Washington, DC, laden with suitcases full of paper to document compliance with coercive, intrusive, absurd, or even immoral regulations.

The concept is being turned into action by the newly incorporated Medical Freedom Fund and already has an impressive roster of supporters: economist Walter Williams of George Mason University; Texas Representative Ron Paul, M.D.; John Goodman of the National Center for Policy Analysis; Idaho Senators Larry Craig and Dirk Kempthorne; Idaho Representatives Helen Chenoweth and Mike Crapo; former Sen. Steve Symms; and the Board of Directors of AAPS.

The Medical Freedom Fund is committed to the elimination of government funding, replacing coercion with freedom and voluntary cooperation. It will also eschew the so-called ``market-based'' managed-care model based on the brutal, unethical principle of denying medical care for profit. Instead, it will promote the concept of true insurance by use of a high-deductible, catastrophic insurance plan fronted with a medical savings account (MSA). Financial assistance to the truly needy will be provided in a charitable manner.

The first demonstration hospital is a 28-bed community hospital in a small town in southwestern Idaho. The administrator, Philip Krueger, M.D., is an obstetrician- gynecologist and a member of AAPS.

The major goals of the project are to replace government funding of this hospital over a two-year period with ongoing local funding and later to expand the effort to other hospitals.

``We must stop looking for the right way to do the wrong thing,'' states AAPS President-Elect Bud Goltry, M.D. ``The very idea of trying to save bankrupt socialized medicine (Medicare and Medicaid) is tantamount to institutionalized irrationality. We must replace it with a true free-market alternative.''

To take the moral high ground it is absolutely necessary to refrain from accepting legal plunder. But there are also practical benefits: freedom of choice of physician; maintenance of confidentiality; and escape from government rationing under which elderly citizens may already be denied the most basic care (such as food and water). Moreover, removing the Medicare regulatory burden may result in an astonishing decrease in costs. ``According to a 1977 study of hospitals' costs of doing business in New York State, 25% of overhead expenses were directly attributable to government regulation,'' notes Dr. Goltry. ``One can only speculate about how much that percentage has increased in the 20 years since. The hospital care of all patients could be much more affordable if those costs were eliminated and the savings passed along.''

Additional savings will be achieved by putting patients back into the financial loop. Once patients can benefit from economizing, they will have the incentive to seek out the most cost-effective care. Spending decisions will be based on perceived value to patients, rather than the whims of administrators or the dictates of impersonal practice guidelines.

Elitism will be studiously avoided. Physicians will do the best they can for each patient, without favoritism to those with a politically correct condition or a special government subsidy.

The veneer of compassionate concern, which is essential to - gain public support for the coercive system of legal plunder (socialism) called Medicare, is rapidly eroding as the system moves toward its inevitable financial implosion. Islands of nongovernment-financed medicine will be urgently needed if the practice of private medicine, based on the ethics of Hippocrates, is to survive the coming debacle.

Weiser, Idaho, like Hillsdale, Michigan, may soon be the focus of national attention, both from freedom-lovers and from those intent on extinguishing the flame. The importance of the experiment cannot be overemphasized. Freedom can survive on islands, in enclaves, or even in the catacombs. Socialism has to be universal, lest anyone be able to escape.

The law has been applied to annihilating the justice that it was supposed to maintain....It has converted plunder into a right....The question of legal plunder must be settled once and for all, and there are only three ways to settle it: (1) The few plunder the many. (2) Everybody plunders everybody. (3) Nobody plunders anybody....

The solution to the problems of human relationships is to be found in liberty....Away, then, with quacks and organizers! Away with their rings, chains, hooks, and pincers! Away with their artificial systems! Away with the whims of government adminis- trators, their socialized projects, their centralization, their tariffs, their government schools, their state religions, their free credit, their bank monopolies, their regulations, their restrictions, their equalization by taxation, and their pious moralizations!

And now that the legislators and do-gooders have so futilely inflicted so many systems upon society, may they finally end where they should have begun: May they reject all systems, and try liberty; for liberty is an acknowledgment of faith in God and his works.

Frederic Bastiat, The Law, 1850

The Use of Information

Although the public may be told that on-line personal medical records will expedite research, patient care, and/or resource planning (and credulous persons may believe this), other reasons motivate those who are urgently striving to obliterate patient privacy.

``Oversight of health care practitioners and institutions to combat fraud and abuse is not possible without access to personal, identifiable health data,'' according to testimony before the National Committee on Vital and Health Statistics Subcommittee on Privacy and Confidentiality (BNA's Health Care Fraud Report 1/29/97). Also, ``fraud and abuse countermeasures could be crippled if ... information cannot be shared among agencies and law enforcement.''

John E. Hartwig, deputy inspector general for investigations in the OIG of HHS, said that the boundaries between audit functions and criminal investigations of health care functions had become less distinct over the past ten years. He believes that there have been no large-scale abuses by law enforcement agencies.

Paradoxically, access to needed information by physicians caring for patients could become increasingly limited (Postgraduate Medicine 101(2):31-36, 1997).

Kentucky Data Requirements

Under KRS 216.2921(1)(1996), the Cabinet for Health Services is to collect data from health care providers to educate the public, the legislature, and the Governor on the cost, quality, and outcome of health services provided in the Commonwealth. According to the statute, ``providers shall submit all required data on every patient, regardless whether a bill is to be generated or the services are to remain unbilled.'' There are 83 data elements, including diagnosis codes. Personal identification information is not to be included with electronically submitted data. The law requires providers to maintain a date log of all data submissions, available for inspection by the Cabinet.

According to Vickie Yates Brown of Greenebaum Doll & McDonald, there was an initial outcry by physicians and the Kentucky Medical Association (KMA) when the requirement was first suggested in 1994. A ``general distaste'' persists, and the KMA intends to continue efforts for repeal. Physicians are not compensated by the state for compiling and submitting the data; the cost of the requirement is unknown.

Thus far, reporting from physicians has been spotty. Many appear to be confused as to whether they are covered by the regulations and whether data submission is still required since the Kentucky Health Policy Board, the entity initially responsible for data collection, was replaced by the Cabinet. To date, only physicians providing major ambulatory procedures or mammograms are required to submit data. The penalty for each knowing failure to submit the required report is up to $500 in civil fines at the discretion of the Cabinet.

All of the data collected from doctors, hospitals, and patients may be used or sold by the Robert Wood Johnson Foundation, under a 1994 contract. RWJF used grant money to steer the state toward Clinton-style health reform, including the data requirements. The Health Policy Board was initially headed by long-time RWJF operative Robert Van Hook.

``In a very real sense, the state was selling confidential data about its citizens to a private foundation in return for a grant,'' wrote Brigid McMenamin (``Trojan Horse Money,'' Forbes, 12/16/96). (Also see AAPS News Jan 1995 and Jan 1996).

Records from the Holocaust Museum

In the 1930s, state-of-the-art data processing technology consisted of machines for sorting punched cards. Between 60 and 80 different categories could be tabulated. The German National Socialist regime employed thousands of people to record national census data onto Hollerith punched cards:

``We are recording the individual characteristics of every single member of the nation on a little card....We are proud that we can contribute to such a task, a task that provides the physician of our German body politic with the material [he needs] for his examination, so that our physician can determine whether, from the standpoint of the nation's health, the data thus arrived at correlate in a harmonious, that is, healthy relationship-or whether diseased conditions must be cured by corrective intervention....'' stated Willy Heidinger of DEHOMAG, manufacturers of Hollerith machines.

Information was submitted to police stations and local statistical and registry offices. Detailed personal and genealogic data were compiled, from tax records, insurance data, employment records, and ostensibly confidential census returns.

Popular compliance was promoted by a wide variety of educational and propaganda publications. Initially, few government officials and even fewer citizens realized the broader ramifications or connections between data collected by government bureaucrats and the implementation of mass murder after 1939. Locating the victims-Jews, Gypsies, disabled persons, and others-was the first step.

Rationing Doctors

Payments to hospitals for not training doctors (see p. S1) may find a rationale in a Delegate's Report of the Dec, 1996, interim meeting of the AMA in Atlanta: ``there is a growing perception that the US is training...a number of physicians that is beyond national requirements.'' The Council on GME recommended an authorization system ``based on limits set by the new public/private sector workforce planning group.''

AAPS Helps Win Dramatic Appeal

An opinion handed down March 6 by the U.S. Circuit Court of Appeals for the Ninth Circuit, in the case of USA v Jeffrey Jay Rutgard, reversed Dr. Rutgard's conviction on 24 of 130 counts and the judgment of criminal forfeiture. The Court unanimously accepted the argument of AAPS, the only amicus, that the government cannot extrapolate from a few billing disputes to declare a physician's entire practice to be fraudulent (see AAPS News Dec 1996, Jan and Mar 1997).

Andrew Schlafly, Esq., who argued the case for AAPS, described this as ``the most important decision in the field for years-a decision that will have a nationwide impact on every prosecution of physicians for billing decisions.''

Watch for details from the opinion next month.

AAPS Calendar

May 31. AAPS Board of Directors, Chicago, Marriott.
Sept. 17-20, 54th annual meeting, Chicago, IL.
Oct. 8-10, 1998, 55th annual meeting, Raleigh, NC.

AMA's Role in Fee Schedules Challenged

Oral argument in the case of the American Society of Dermatology v. Shalala will be heard in the US Court of Appeals for the District of Columbia on April 14.

ASD alleges that the Secretary of HHS has failed to comply with the Federal Advisory Committee Act (FACA), the Government in the Sunshine Act, the Freedom of Information Act (FOIA), and the Administrative Procedure Act (APA) in promulgating the physician fee schedule for Medicare Part B. (The violation of FACA by Clinton's Health Care Task Force was also the issue in AAPS v. Clinton.)

Plaintiff dermatologists allege that the Secretary utilized the AMA and AMA-recognized specialty societies, none of them employees of the federal government, as a ``preferred source of advice and recommendations.'' These AMA representatives have met several times per year since 1989 with HCFA officials, after the expiration date of the APA-required ``notice and comment'' period. Among themselves, these representatives have determined rates of Medicare reimbursement in a completely closed process that excludes all public scrutiny. Additionally, the Secretary, under an agreement with the AMA, adopted wholesale the AMA-copyrighted CPT codes, excluding input from the ASD and others. The AMA publishes an estimated 800,000 copies of the annually revised CPT-code book, containing information required by law to be used by all who submit Medicare claims, creating a windfall for the AMA-the outcome that federal sunshine laws are supposed to prevent.

Plaintiffs request the federal court to permanently enjoin future meetings of the relevant committees and the use of any recommendations heretofore made by them.

For additional information, consult the ASD website at http://www.asd.org

Doctors in the Dock

According to U.S. attorney Alan D. Berstein (San Diego Union Tribune 11/22/96), the basic cause of fraud in the ``health care system'' is that ``we mostly have separated the consumer of medical service from the payor for that service.''

However, fixing the cause of the problem apparently is not of interest to him. Instead, he notes that health-care fraud is Attorney General Janet Reno's number 2 priority, right after violent crime. ``Moral considerations aside, it remains purely an economic calculus.'' For the first time, there are criminal prosecutor/health-care fraud coordinators in each of the nation's 94 U.S. attorney offices.

The Medicare Compliance Alert (1/13/97) advises physicians to expect more whistleblowers, more private qui tam suits, and more private payer investigations, using mail fraud statutes. Also, says attorney Randi Kopf of Rockville, MD, ``The Health Care Portability Act [Kassebaum-Kennedy] allows OIG and the FBI to go after smaller providers such as single-doctor practices.''

AAPS headquarters is learning of about one new horror story per week:

An immigrant physician in Illinois, a US resident for 22 years, a veteran of Desert Storm, and a past president of a county medical society, was followed into his office by 20 law enforcement officers one morning, four of them pointing their guns at him. They seized ``everything,'' downloaded all the records in his computer, and detained him for six hours (during which time a patient of his died of a heart attack). A week later, he still had not been notified of any charges. He was not informed of any rights, and investigators demanded that he answer questions before he called his attorney. He has been denied access to his records either for patient care or for testifying at scheduled depositions. He is convinced that phony patients have consulted him recently. He has had a consultant review his claims, and he implemented all recommendations on billing practices. He does not know why his family practice has been targeted-perhaps a disgruntled employee reported on him. ``I think I would be better off in Russia,'' he said.

An ophthalmologist in southern California, who does about two surgical procedures per week, was without warning suspended for ``fraud and abuse'' pending an audit. All Medicare payments have been placed on hold; she receives checks marked ``void.'' She was at first told that a decision would be made within 180 days, but is now told that the deadline does not apply in her case. Upon reviewing her charts, a billing expert told her she might be ``dinged'' because she billed for a consultation on cases in which the primary physician had not written a specific reason for the consult. Otherwise, she is unaware of any errors or wrongdoing. A competitor (who does 140 cases/week) reported her to HCFA for doing ``unnecessary surgery'' although no such evidence exists. (This competitor has ``turned in'' other physicians in the past.) Referring physicians have been warned not to send patients to the accused because she is under investigation.

A prominent, well-respected Utah geriatrician was given a choice by the Medicare Fraud Unit: 80 felonies, 30 years in prison, and $40 million in fines, or accept a plea bargain in which he agreed to six felonies (including a RICO) and $600,000 in fines. The charge: making monthly visits to nursing home patients. He said the visits were required by state and federal regulations; they said he had ``typed up'' the regulations himself. His states his billing error rate to be 21/50,000 or 0.04%. He has now essentially been working without pay for two years; friends are paying his legal bills. He reports that investigators have invaded nursing homes with guns drawn and grilled nurses for hours in the middle of the night. His 36- year-old wife had a cardiac arrest but survived.

A Texas psychiatrist will be sentenced on April 17 to between 3 and 8 years in federal prison. He was convicted of mail fraud due to billing insurers for missed appointments during the period 1989-1992. The physician argued that it is customary to bill psychotherapy patients when they fail to show, and he had signs to this effect prominently displayed in his office. He said it did not occur to him that it would be fraudulent to bill the insurer, and that a phone call to Dr. Jeremy Lazerus, head of the Ethics Committee of the American Psychiatric Association, confirmed his belief that no warning against this practice had ever been published.

On March 3, a Houston federal judge declared a mistrial in the case of Dr. Stanislaw Burzynski, accused of 75 counts of contempt, violation of FDA regulations, and mail fraud due to billing insurers for treatments with a non-approved cancer drug. The jury was split 6 to 6 on all charges, and the Judge acquitted Burzynski of 40 counts of mail fraud, saying the government failed to prove those charges. Prosecutors may appeal. A new trial on the other charges is scheduled for May 17. The effectiveness of the experimental drug, antineoplaston, was not an issue. Burzynski's patients picketed the courthouse, saying the lengthy FDA approval process was robbing them of their last hope for a cure.

Members' Page

Collecting Scalps. Injustice by state licensing boards is a nationwide problem. The Maryland Medical Society has helped introduce two beneficial changes: (1) coverage for disciplinary actions by the largest malpractice insurer and (2) formulation of a category of discipline wherein only remedial actions are imposed without public disclosure as to the National Practitioner Data Bank. Nonetheless, I know physicians in poverty and some who will probably never practice again, due to almost totally unjustifiable actions by the state medical board. There are ``doctor opportunists'' eager to facilitate the persecution of their colleagues. The president of our state board said at a meeting that there was pressure from the legislature and consumer groups to clean up medicine. He was afraid that the government would take over this function if the physicians did not, and thus wanted to give the ``appearance that we are doing something'' by disciplining large numbers of doctors. When he was challenged by a member of the audience who asked if he cared that lives were being ruined, there was no reply. A fellow physician said the situation was similar to that in his native country when the communists took power. There were physicians who rushed to ingratiate themselves in the service of the new regime.

The Physicians Advocacy Network is one group that is trying to alleviate this problem.
Robert M. Scovner, M.D., Frederick, MD

The Enemy Is Us. Organized medicine continues to fall for the ``Bricks Without Straw'' maneuver: slowly create an ever worsening problem, put the victim in charge of solving the problem, thus making the victim feel he is responsible. Then blame the victim for the problem and the failure to correct it when the disaster occurs....

For example, AMA Past President Alan Nelson gleefully implies that surgeons are feeling ``sour grapes'' because the decision to redistribute their incomes wasn't put off for another year. What he apparently doesn't get is that this entire incomprehensible and irresponsible concept of the RBRVS should never have gotten started in the first place....
Gary K. Keats, M.D., Clearwater, FL

Digging Your Own Well. I am meeting more and more doctors who, like me, have chosen to replace their medical income entrepreneurially in order to practice medicine on their terms, without regard for the stranglehold of managed care. I believe I can most effectively battle managed care's erosion of my income and autonomy by becoming financially independent [by selling Amway]. I practice neurosurgery as a hobby.
Jonathan Ballon, M.D., New Britain, CT

Is Blue Cross the Government? In 1995, Blue Cross Blue Shield demanded that I repay $262 because of coding errors and payment errors. ``This is exactly like an IRS audit; you have no choice but to pay.'' I told them that I had no contact with BCBS at any time, that all my payments came directly from the patient, that I had never joined the BC PPO and never would, and that I would go to jail before I paid them one cent on this case. I sent their letter and a description of the conversation to the Illinois Dept. of Insurance and was told that I had no obligation to pay and that I should contact a lawyer to sue BCBS for harassment if they continued. Then BCBS apparently went to Springfield, and I got a very carefully worded letter from the Dept. of Insurance. BCBS told me that the same audit had gone to at least 2,000 other physicians across the USA; they had all paid and I would have to pay. I reiterated that I would go to jail first, and I haven't heard from them since. Blue Cross is frighteningly powerful, I think- seemingly utterly ``in bed with'' the government.
Carol K. Tharp, M.D., Winnetka, IL

Divine Rights Reborn? From a letter to VA newspapers: The ``divine right'' of kings to rule as they pleased was challenged in 1215 when Englishmen forced King John to sign the Magna Carta, guaranteeing the right to own property, freedom from burdensome and increasing taxes, and trial for a crime only with the testimony of credible witnesses. Today, in America, we are gradually losing even these basic freedoms as Congressmen betray their oath of office and ignore the Constitution....
James B. Hutt, Jr., M.D., Warrenton, VA

[No congressman has yet signed the Affirmation of Citizens' Rights--Ed.]

As in Canada...A letter from the American Academy of Ophthalmology concerning the HCFA fee schedule, which cuts surgical fees by 22 to 63%, is another example of the ``war of all against all,'' showing that socialism must end in tyranny. In Alberta, Canada, there is serious talk of decreasing cataract fees to $125, including all pre- and post-op care for three months. As yet, no one in Canada is behaving like the ``Little Red Hen.'' Doctors may be smart, but wisdom is not their forte.
Robert Gervais, M.D., Mesa, AZ

The Impact of Computer Errors. I lost my license in New Jersey for some computer errors. Other aspects brought up by the Division of Criminal Justice and the Attorney General's Office and undercover agents were lies. The New Jersey State Board made its determination without deliberating on the case and without listening to my attorney....I never had a problem before CPT codes and the computer. I spent $40,000 on computer experts who knew less than expected.
Lawrence Nessman, F.A.C.G.P., Wayne, NJ

The Smoke and Mirrors Department

Medicare and Medicaid and the big Public Health programs, the programs that affect so many doctors today, are bound up with the debate on the federal budget. The budget drives policy; policy, too often, does not drive budget. So, until Congress can reform the budget process and get the horse before the cart, doctors, and patients, should pay attention to the big budget picture.

The Good News is that President Clinton's budget does- technically and on its own assumptions-reach a balance in 2002, still the target date for both Republican and Democratic deficit hawks. An easy way to remember it is that this is one year after the Medicare hospitalization is scheduled to go broke. The Bad News is that the ``Era of Big Government''-a memorable Presidential phrase-ain't over.

The Administration's budget balancing act, designed to elicit the oohs and ahhs of the Rubes at the Midway is a quintessential Clinton performance. It is not exactly what you thought- it never is-and you've got to catch the careful qualifications and the easily missed modifiers to get a clearer picture.

Economists at the Heritage Foundation have come up with some rather neat gems buried in the huge White House budget document. Clinton plans $145 billion in total spending reductions, of which only $25 billion will occur while Clinton is still in office. A Profile in Courage.

Federal spending is expected to soar into the fiscal stratosphere anyway. The President's budget proposes to spend $1.7 trillion in Fiscal Year 1998: $25,480 for every ``typical'' family of four. Over the next five years, the President's budget would increase federal spending by nearly $249 billion, and official Washington will also be collecting $391 billion in revenues. Totalling up the big numbers, the Clinton budget calls for spending $8.98 trillion through Fiscal Year 2002 while collecting $8.64 trillion in tax revenues. Looks like pretty Big Government to us.

As for the Administration's vaunted tax relief-you remember, the ``targeted and responsible'' kind-Heritage economists calculate that taxpayers will get back all of 25 cents in tax relief for every $100 they send to Washington. Big deal.

And what about the national debt? While the Clinton budget reaches technical balance in 2002, the proposal also adds $344 billion to the national debt over this period, meaning that every American household will owe an additional $3,440.

In estimating the impact of the Clinton Budget on the national economy, Heritage economists note that the Clinton Plan would increase the costs of doing business and reduce business investment slightly below the baseline projections under current law. Therefore, 80,000 fewer new jobs would be created than expected under current law.

Medicare's Mess

As noted in the last Legislative Alert, the White House response to the deepening crisis in Medicare is not serious. The problem with Medicare is not merely its imminent hospitalization trust fund bankruptcy in 2001 or even earlier. The imminently unbalanced Medicare books are a signal of the deeper problem: a level of Medicare spending that grown-ups in the White house and Congress realize cannot continue without cataclysmic fiscal consequences.

In 1996, Medicare experienced a slowdown. According to the Congressional Budget Office (CBO), the annual growth rate was 8.4%, down a previous estimate 9%. But most serious analysts think that Medicare will soon be climbing back into the double- digit growth range. If Medicare costs continue to soar, the most likely threat is the imposition of additional huge taxes on as- yet-unsuspecting working families, who already pay the bulk of Medicare's bigger and bigger bills, to sustain a fundamentally broken socialist system. The President's plan, which calls for a savings of $100 billion in Medicare over 5 years, relies heavily on the old sauce of price controls on doctors and hospitals and other providers. Nothing imaginative there. But one of the more eye-catching twists to the Clinton Medicare reform program is the neat trick of sending the lion's share of the high-cost home health program from Medicare Part A to Medicare Part B, the part of the program that pays doctors and subsidizes outpatient services. The President says this will extend the solvency of the Medicare Part A trust fund till 2007. However, according to the Congressional Quarterly Monitor (2/7/97), HHS Secretary Donna Shalala and HHS staff haven't got a clue on how much the shift from Part A to Part B would ``save'' (or shift), at least not yet. The source of the 2007 estimate for trust fund solvency is simply a January 21st memo written by Richard Foster, Medicare's Chief Actuary.

The shift is politically neat because 75% of the funding for this part of the Medicare program comes from general revenues, a nice drain that taxpayers won't see directly on their payroll stubs like they do their Medicare Part A tax. And the elderly will get more benefits without any increase in their premiums or any cost-control mechanisms like copayments for home health care. That means that the shift will accelerate the cost increases in Part B.

The Clinton White House team-even with the unprincipled Dick Morris gone to tell his stories to the talk shows -knows how to read the politics of the issue and juggle the books. The politics of ``something for nothing'' pays handsomely in big poll numbers-but nothing is more costly.

Agricultural Crop Subsidies for Doctors?

While the Clinton budgeteers propose to increase Medicare spending in Part B, the Health Care Financing Administration (HCFA) is solemnly pontificating that there are just too many doctors. They know these things. How do they know? Well, they have the statistics to prove it. Statistics on what? Well, statistics on a profoundly distorted health insurance market, where the normal forces of supply and demand, particularly consumer choice and competition for consumers' dollars, are largely absent. With a distorted market, plagued by perverse incentives, you get perverse results; and perverse results generate even more perverse government policies.

With the tax-supported move to managed care by employers-not by employees freely making such choices-the HCFA has determined that there are too many doctors. Patients of course, who exercise market control as consumers in virtually every other sector of the economy, have nothing to say about this. So, HCFA has decided to pay 41 hospitals in New York $400 million over the next six years to teach 2,000 fewer doctors.

If the Congress, which is supposed to represent the taxpayers, felt that there were too many doctors, would they not intervene and stop HCFA from pursuing this silly business and simply reduce the Medicare funds going to physician teaching? Not if they listen closely to HCFA's reasoning. As Investors Business Daily notes (2/20/97): ``Because they have so many unprofitable cost centers, some would go under. The government health policy experts think that would leave some areas and populations with inadequate access to care. By the way, this counts as a Washington spending cut: Medicare otherwise would have paid those hospitals some $700 million.'' It is another bedrock principle of federal policy that financially unprofitable enterprises, in the medical sector of the economy, are to be subsidized.

Within the enclosure of economic insanity, otherwise insane proposals appear reasonable. There is a certain logic to it; it fits with the perverse incentives that now govern employer-based health insurance, now governed by corporate managed care: pay doctors more for doing less.

It might be worthwhile for Congress to accept this latest HCFA inspiration. If something for nothing is a valid principle of social and economic policy, why not apply it creatively? Take some appropriate portion of the Department of Education budget and use it to pay the nation's most prominent law schools to reduce the number of lawyers they teach. Perhaps Congress could encourage the lawyer reduction by giving taxpayers a special tax break for voluntarily contributing to the Department of Education's special lawyer reduction fund.

Of course, if you restrict the supply of legal service, you will increase the price of those services. So, to make sure that the smaller supply of lawyers do not jack up their fees beyond what is ``necessary and reasonable,'' or make ``obscene'' windfall profits, Congress could simply extend the methodology of the Resource-Based Relative Value Scale to the legal profession, capped off with federal restrictions on balance billing. The experts at Harvard University, who devised the RBRVS, could certainly do the job, and they might wish to consult with the faculty at Harvard Law School who would benefit directly by getting bigger bucks for teaching fewer students. Why not? We do this sort of thing in the medical sector of the economy every day.

Medical Costs

Private-sector medical costs have been rising moderately for the last three years, a sharp difference from the routine double- digit increases in the mid to late 1980s. Some analysts caution that the decline may be less impressive than the numbers show because the general inflation rate has also declined, from 4.3% in 1990 to 2.5% in 1995. There are other factors at work as well. First, employers are shifting costs to employees more directly, making employees pay a larger share of premiums, or increasing the copayments and deductibles in employer-based health insurance plans. Second, fewer firms are offering their employees health insurance, especially smaller firms, who tend to hire a larger proportion of low-income people.

Foster Higgins, a New York based benefits consulting firm, says that the movement to managed care has contributed to the slowdown. Analysts think that the recent lull is only temporary and that medical costs will take another sharp upward swing, possibly this year.

At the same time, the CBO has been revising downward its estimates of Medicaid cost increases, from more than 9% to 7.7% between now and 2002, the year that the Clinton Administration and Congress have vowed to have a balanced budget, making it easier for Congress and the White House to reach a budget agreement.

Backlash against Federal Mandates?

Top-ranked nationally syndicated columnists like Charles Krauthammer and Jessica Matthews are taking exception to the notion that members of Congress are competent to set medical benefits or specify the kinds or duration of medical treatments or procedures. Krauthammer, a physician, in a particularly bitter piece on the high-profile Congressional effort to give special privilege to certain ``politically correct'' disease groups-such as women suffering from breast cancer-argues that politics supersedes medical ethics, and necessarily by choosing one disease condition over another, relegates the various other sufferings of the politically powerless to the equivalent of second-class citizenship: ``Forgive my rudeness in producing this brief excerpt from the catalogue of horrors that life can visit upon the human body. But I am sorely provoked by the arrogance of a chamberful of lawyers stretching out its magic wand to anoint with special protection one, and only one, tragic affliction.''

Congratulations are in order to the editors of The Washington Post who, now and then, cut to the quick on health policy. Consider this neat summation of the current situation from the Post's editorial ``Health Care Heavies'' (2/28/97): ``The new division of labor in health care cost containment goes about like this: The politicians look to the managed care industry to play the heavy and do most of the required nay-saying. Then the same politicians take the lead in denouncing the industry when there is an outcry that it has gone too far. Their role becomes to moderate the behavior of the tough guys on whose toughness they themselves by default depend.'' The Post goes on to say that the response to the excesses of managed care is to impose more government mandates on private health insurance: the anti-gag rules, the maternity stays, soon-to-be-enacted mandatory mastectomy coverage, etc. The mandates, as we have noted, are inevitable outside a system of consumer choice. Consumers will be protected. And too many conservatives in Congress, many of whom have been brainless champions of managed care as a ``market based solution'' to medical costs, are equally at fault for creating this mess.

Then the Post concludes: ``Managed care is a less than perfect system. Congress as national benefits commission is not an altogether reassuring prospect either. Last year, as part of the same bill in which it said newborns should be allowed to stay in the hospital more than 24 hours, the Senate considered forbidding private insurance plans from imposing tighter benefits limits on mental illness than physical. The president liked the idea, too, but it would a have a cost as well as a benefit, which advocates found it too easy to brush aside. If Congress blocks the worst instincts of the insurance industry, who blocks the worst instincts of Congress?'' Exactly.

Bald-Faced Lies

The chief lobbyist for the abortionists admitted he lied last year about the real number of partial birth abortions, and admitted that most of the unborn victims are healthy babies, sending shock waves through the Capitol. Was President Clinton misled in his veto? Look for conservatives in Congress again to move quickly against partial birth abortion.